Having said that, it might surprise you to learn that there are actually two types of bankruptcy in Ontario: ordinary and summary administrations. Over 90% of all bankruptcies in Ontario today are summary administrations.

The general concept of both ordinary and summary administrations is the same; you assign control of certain assets and your income to a trustee, in exchange for protection from your creditors, the elimination of your debt and a fresh start.

Ordinary Bankruptcy

The majority of legislation that governs ordinary bankruptcies was drafted in the early 20th century when, at the time, it was typically only businesses that declared bankruptcy. Ordinary bankruptcies have characteristics of what many believe is the stereotypical type of bankruptcy. There is a mandatory meeting you have to attend with your creditors, an advert is placed in your local newspaper announcing your bankruptcy and a court hearing is required to obtain your discharge.

Summary Administration

In 1970’s, credit cards were made available to individuals. Throughout the 1970’s and 1980’s when they gained popularity, more individuals started to incur more debt, more people started to turn to bankruptcy trustees when they ran into trouble repaying them.

It was found that treating individuals, the same way as a business was treated was cumbersome, time consuming and costly. As a result, in the late 1980’s the government introduced new legislation streamlining the bankruptcy process for individuals. This led to the introduction of summary administration bankruptcies.

In a summary administration bankruptcy:

the meeting with your creditors is now only required if the government or the creditors specifically request it;

there’s no advert in the local newspaper; and

you can be eligible for an automatic discharge without having to go to court.

These little changes made the process much more streamlined and cost effective for everyone involved.